Eastern District Affirms Non-Dischargeability of Debt Arising From Plaintiff Verdict/Judgment in Sexual Harassment/Hostile Work Environment Case

In Townsend v. Ganci, No. 16-CV-2814 (JFB), 2017 WL 752203 (E.D.N.Y. Feb. 27, 2017), the Eastern District of New York upheld a Bankruptcy Court determination that a debt resulting from a judgment (following a jury verdict) for the plaintiff in an employment discrimination (sexual harassment/hostile work environment) case was non-dischargeable in bankruptcy.

The law provides:

The Bankruptcy Code discharges preexisting debts in order to give honest but unfortunate debtors a fresh start. However, the Bankruptcy Code contains numerous exceptions to the “fresh start” principle and denies relief to debts resulting from certain types of undesirable behaviors, such as injury by the debtor to the creditor. To that end, Section 523(a)(6) provides, in relevant part, that: “A discharge under … this title does not discharge an individual debtor from any debt … (6) for willful and malicious injury by the debtor to another entity or to the property of another entity.”

Judge Bianco noted that in this case “the jury determined, inter alia, that Townsend subjected Ganci to offensive acts or statements about sex; that Ganci did not invite or solicit such acts or statements; and that the acts or statements were so severe or pervasive that they materially altered the terms and conditions of Ganci’s employment” and held “that such findings evince intentional conduct by appellant.”

The fact that the jury found that Townsend constructively discharged Ganci supported this conclusion.

Specifically, the third element of that claim (per the jury’s instructions) – “that plaintiff’s resignation was a reasonably foreseeable result of Townsend’s actions, or Townsend acted with the intent of forcing plaintiff to quit” – “satisfies the willfulness prong of Section 523(a)(6) because the jury found that Townsend either acted with intent to compel Ganci’s resignation, or with the belief that such injury was substantially certain to result from his conduct.”

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